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29 November 2010

The PSC's Take on the Proposed "Bollywood Amendments"

Note: The author, Nandita Saikia, has been involved in advising a number of organisations on the various aspects of the Copyright (Amendment) Bill, 2010.

The Report of the Parliamentary Standing Committee (PSC) dealt extensively with the "Bollywood Amendments"; this post recapitulates the opinions and recommendations of the PSC on the same.

Exhaustion

During the consultation with stakeholders which the PSC undertook, industry associations across the board were unanimously opposed the proposed amendment to the definition of an “infringing copy” in Section 2(m) of the Act, and the consequent introduction of international exhaustion. Among those who spoke out against the proposal were the South India Music Companies Association which ‘pointed out that such a move would act as a huge disincentive for sound recording labels to obtain license from foreign producers’, the Indian Motion Picture Producers' Association, the Motion Picture Association, the Indian Broadcasting Foundation, the Federation of Indian Publishers, and the Association of Publishers in India (which argued that the introduction of international exhaustion could imperil the Low Priced Edition programme in India to the detriment of the Indian student community).

In fact, the only body to welcome the proposed amendment was the Authors Guild of India which said that it was the need of the hour. Although the PSC did not go quite so far, it stated that the insertion of the proposed provision into the Act ‘seemed to be a step in the right direction, specially in the prevailing situation at the ground level’. However, the PSC also cautioned the Government to keep the interests of the student community in mind.

Authorship, Ownership and Term Extension

The PSC rejected the proposal to amend Section 2(d)(v) of the Act so as to have the principal director be a joint author of a film, noting that the principal director is not treated as the author of a film in jurisdictions like USA, and pointing out that: (a) principal director may be protected through other arrangements including union contracts, (b) international treaties (viz. the WCT, WPPT and Rome Convention do not require the principal director to be treated as an author, (c) it is the producer’s role which is central to the creation of the film, (d) the term "principal director" has not been defined either in the Bill or the Berne Convention, and is not a term commonly used in the industry, (e) the Bill proposes to ‘have partnership in a cinematograph film is being given to an undefined person i.e. principal director without any liability/responsibility being assigned to him’, (f) directors are well-paid and are not marginalized, and (g) if the proposed provision were to become law, it could encourage producers not to engage directors and to the work of directors themselves, or alternatively to engage directors to work as assistant directors which would impede the progress of their careers.

Further, although the PSC clearly recognised that it is important to protect the directors of old films, it did not agree that the proposed amendment to Section 26 of the Act was the best way to do so. However, the PSC stated that it failed ‘to comprehend the rationale behind the proposed introduction of a new stakeholder, i.e., principal director that too for films produced 50 years ago. The main objective of this exercise was to protect the producers of old films economically. It seems remedy proposed is worse than the problem’.

Exploitation using Future Technologies

The PSC appeared to endorse the proposed amendment to disallow agreements for the exploitation of works using future technologies. In Paragraph 9.18 of its Report, the Committee stated that “the proposed amendments in section 18 will protect interests of authors in the event of exploitation of their work by restricting assignments in unforeseen new mediums...”

Out-film use

The PSC endorsed the recommendations on out-film use, and in fact, suggested that the provisions be strengthened. Although the provisions contained in the Bill were vehemently opposed by producers and music companies, the PSC was not swayed by their arguments. Interestingly, the PSC stated in Paragraph 9.18 that ‘the proposed amendments to Sections 17, 18 and 19 of the Act reiterate what is already provided in Section 13 of the Act’.

The rationale of the PSC, however, centred around a footnote in the IPRS case, and the recommendations of the PSC with respect to the amendments proposed to be made to Section 18 of the Act did not make reference to the 1994 amendments made to the Copyright Act.

Describing the current scenario in Paragraph 9.13 of its Report, the PSC stated that “when a song/music is incorporated in a film, it is relating to synchronization right of author and music composer which is assigned to the producer of the film as per section 17(b) or in the absence of agreement, film producer is the first owner. However, film producer is also getting other independent rights of author and music composer of their works envisaged in section 13 of the Act. As per section 17(b), he further assigns these rights to the music companies for upfront lump-sum amount. When the film[s] songs are performed separately and independently through TV/Radio, restaurants, airlines, auditoriums or public functions etc. film producer becomes the first owner and authors/music composers lose economic benefits of exploitation of their works to music companies who become ultimate owners of these works”.

The PSC continued in Paragraphs 9.14 to 9.18 by taking note of the fact that independent rights of authors of underlying works in films are wrongfully exploited by the producers and music companies by virtue of Supreme Court judgment in the IPRS case. However, instead of noting that the 1994 amendments made to the Copyright Act should have overridden the 1977 judgment, the PSC highlighted a footnote in the judgement where Justice Krishna Aiyar advised that ‘the authors and music composers who are left in the cold in the penumbral area of policy be given justice by recognizing their rights when their works are used commercially separately from cinematograph film and the legislature should do something to help them’.

Further, the PSC pointed out that it was also clarified in the IPRS case that “the right of producer in a film as entitled under section 14(1)(c) cannot trench on the composer's copyright given under section 14(1)(a) when the music is separately played in a restaurant/aeroplane/radio station/cinema theatre. If producer enjoys snychronisation right, authors/composers should enjoy performing right. The footnote of the judgement also states that the twin rights can co-exist, each fulfilling itself in its delectable distinctiveness”.

With regard to the prohibition on assigning the right to receive royalties for out-film use to anyone but a legal heir or a copyright society, the PSC was of the opinion that such an institutionalized system would “greatly benefit the authors/lyricists and the composers as individually they may not be in a position to collect their royalties”. However, it did add a note of caution stating that “the system of institutionalized societies needs to be strengthened as everybody may not be in a position to negotiate contracts with equity and there is a vast difference between contract of service and contract for service. Established names may negotiate and demand equity but beginners may remain at the receiving end and their contribution may go unnoticed and unrecognized”. The PSC said that it felt that “the film industry needs to address this issue urgently and also evolve a viable profit sharing system for other categories of craftsmen/technical experts engaged in the making of a film”.

All in all, the main thrust of the opinion of the PSC was that that the proposed amendments to Sections 17 and 18 of the Act were overdue, and it was sad that it had taken more than thirty years for the legislature to act upon a Supreme Court directive. However, with respect to Section 18, the PSC suggested that the proposed amendments be revised so as to provide greater clarity and to remove ambiguity with respect to issues such as royalty sharing.

The PSC suggested that the proposed second proviso to Section 18 be modified to state:

"Provided also that the author of the literary or musical work included in a cinematograph film shall not assign or waive the right to receive royalties to be shared on an equal basis with the assignee of copyright for the utilisation of such work in any form other than for the communication to the public of the work along with the cinematograph film in a cinema hall, except to the author's legal heirs or to a copyright society for collection and distribution and any agreement to contrary shall be void".

"Provided also that the author of the literary or musical work included in the sound recording but not forming part of any cinematograph film shall not assign the right to receive royalties to be shared on an equal basis with the assignee of copyright for any utilisation of such work except to the author's legal heirs or to a collecting society for collection and distribution and any assignment to the contrary shall be void".

In Paragraph 10.3 of its Report, the PSC noted that “the proposed amendment would enable the authors to retain their rights assigned to societies and also retain their control on societies”. However, the PSC suggested that the proposed Section 19(9) be modified in a manner which would clarify royalty shares by recommending that the following provision be incorporated into the Copyright Act:

"No assignment of copyright in any work to make a cinematograph film shall affect the right of the author of the work to claim an equal share of royalties and consideration payable in case of utilisation of the work in any form other than for the communication to the public of the work, along with the cinematograph film in a cinema hall."

In addition to this, the PSC also recommended the inclusion of a new sub-section viz. Section 19(10) which would state:

"No assignment of the copyright in any work to make a sound recording which does not form part of any cinematograph film shall affect the right of the author of the work to claim an equal share of royalties and consideration payable for any utilization of such work in any form".

As there is nothing in the Act or the Bill which either proscribes or would proscribe assignments of future works, authors of underlying works could, in theory, assign all their future works to a copyright society. This would prevent them from being able to assign any work to a producer. Further, authors would also be able to assign the right to receive continued royalties to a copyright society. As such, arrangements could be made to ensure that the right to receive continued royalties, and the ownership of the work vested in the same person (i.e. the same Copyright Society).

Further, although the PSC suggested that modifications be made to the proposed provisions to clarify some of the ambiguities relating to royalty sharing, what is of considerable concern is that the PSC Recommendations, if adopted, would strech far beyond "out-film" use. They would mean that the authors of underlying works would have a right to continuing royalty (at the rate of 50 per cent) not only in the case of the out-film use of the underlying works but also in the case of “in-film use”, unless such use is in a theatre. Further, considering that the term “film” as defined in the Copyright Act, is not limited to feature films produced in the movie industry but includes all “cinematograph films” such as serials and reality TV programmes broadcast on television or in flights or sold through DVDs, the proposed amendments (as revised by the PSC) would have a considerable impact on the entire entertainment industry. Pertinently, analogous provisions would also apply to sound recordings.

There is little clarity in the proposed (revised) amendments as to who would be responsible for the payment of continued royalties to the authors of underlying works, how the share of each one of such authors would be determined, and whether two co-producers could inter se decide that only one of them would be responsible for the payment of the author’s share. As such, the revised version of the amendments proposed by the PSC is not itself completely free from loopholes.

Disputes

With reference to the proposed amendment to Section 19A stating ‘pending disposal of an application for revocation of assignment under this provision, the Copyright Board may pass such order, as it deems fit regarding implementation of the terms and conditions of assignment including any consideration to be paid for the enjoyment of the rights assigned’, the PSC noted that the South India Music Companies Association was of the opinion “that such a move may lead to situations when music composers/lyricists may file frivolous applications for revocation and still continue to get royalty on the basis of an interim order of the Copyright Board”. However, the PSC was not convinced by the apprehensions expressed by the South India Music Companies Association and stated that the Copyright Board was competent to assess the merit of a case filed with it. Nonetheless, the PSC suggested that a time limit be prescribed for the adjudication of an application by the Copyright Board, and pointed out that there would be “little likelihood of any undue delay or any deliberate attempt on the part of a complainant”.

Statutory Licences for Cover Versions and Radio Broadcasting

The Committee endorsed the proposed inclusion of a statutory licence vide the proposed Section 31C of the Copyright Act, and stated that it failed to understand the reservations of music companies considering that the interest of the copyright holder would be duly protected, and that the proposed provision was intended to substitute an in the background of judicial pronouncements.

With respect to the statutory licence proposed to be introduced in relation to broadcasting vide the proposed Section 31D, the PSC broadly endorsed the proposal although it cautioned the Government to ensure that there were no procedural shortcomings in the proposed Section. Specifically, the PSC noted procedural shortcoming with respect to the viability of payment of royalty in advance, the practicability of compulsory mentioning of artists' names, the requirement of maintenance of agreement between the radio broadcaster and the copyright society. It is also pertinent to note that the PSC Report referred to the proposed Section as one relating to Radio Broadcasting, and therefore preferred to rely on the marginal note than on the heading of the proposed Section.

The Restructuring of the Performer's Right

The PSC broadly supported the provisions restructuring the performer's right and according moral rights to performers. However, it highlighted an observation of the Association of the Radio Operators of India stating that if a ‘performance’ were to be defined in a manner which included communication by any means to public of any sound recordings, current judicial deliberations on whether free broadcast through radio constitutes performance would be virtually overruled. Noting the Association’s observation that the “playing of recorded songs cannot be construed as performance and this matter is currently under review of courts,” the PSC recommended the modification of the proposed amendments in the light of court rulings.

Structure of Copyright Societies

One fair way in which to solve the issue would be to allow both copyright owners and the authors of copyrighted works to become members of copyright societies. This is a suggestion which the PSC endorsed in its Report. Further, the PSC drew attention to Section 33(4) which empowers the Central Government to cancel the registration of a copyright society if it is satisfied that the society is being managed in a manner detrimental to the interests of its members.

Despite the fact that the music industry was vehemently opposed to the incorporation of the proposed amendments, with Saregama RPG Enterprises going so far as to aver that, “the amendments in section 52 (1)(a), (b) and (c) will prove to be a God-sent opportunity to pirates to falsely plead that music files illegally stored by them on their computers, mobile phones etc. are for their private or personal use or for criticism or review,” the PSC chose to to endorse the creation of a safe harbour to protect ISPs/OSPs under Indian copyright law.

Among other stakeholders whose opinions were noted by the PSC in its report were various intermediaries, the Indian Broadcasting Federation (IBF), the Indian Motion Picture Producers Association, the Authors Guild of India, and the Business Software Alliance. The ISPs/OSPs (eBay, Google and Yahoo) were, not surprisingly, in favour of the proposed amendments and, in fact, suggested that they be further strengthened in their fair by (a) facilitating the exemption of intermediaries from liability in case of not just 'transient and incidental' storage of allegedly infringing material but also in case of 'transient or incidental' storage of such material, (b) specifically including 'areas such as search, hosting, information retrieval and caching' within the scope of the safe harbour, (c) specifying that 'an ISP will be liable only if it has knowledge of the infringing activity and has failed to remove the infringing material on receiving notice from the concerned content owner or if it induces, causes or material contributes to the infringing conduct of another ', (d) specifying 'the extent and parameters of ISP liability otherwise every ISP is subject to unlimited liability for third party actions ' particularly to ensure that they are not 'held responsible for words, pictures and videos they did not create, (e) requiring that an effective Notice and Takedown (NTD) mechanism be followed , (f) ensuring that ISPs were not faced with criminal liability in case of infringement, (g) ensuring that the fair dealing provision be updated 'to keep in pace with Indian Court decisions and international developments for flexibility in interpreting fair dealing principles '.

The IBF suggested that the 14 day period provided to a copyright owner for obtaining a court order for continued take-down of allegedly infringing material be made a 90 day period. The BSA and the IMPA also had reservations about the 14 day period, with the IMPA stating that it would impose 'an additional burden on owner of copyright'.

The Author's Guild, however, appeared to go a step beyond the OSPs/ISPs themselves, and suggested that the proposed sections be given a retrospective effect. It also suggested that 'the procedure for preventing storage of a work … be made simpler rather than asking the author to obtain order from the competent court'.

After taking into consideration the opinions of various stakeholders, the PSC recommended that (a) the 14-day period for obtaining a court order for continued take-down of infringing material be reviewed, and (b) that the words "transient and incidental" in the proposed provisions be substituted with the words "transient or incidental".

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